Crystal Cove bed taxes may benefit district

Visitors to the wildly popular overnight-stay cottages at Crystal Cove State Park could help fund renovation of the rest of the historic district, under a proposal floating around Newport Beach City Hall.

The plan would set aside a percentage of the hotel bed tax the city collects from the 13 cottages that opened in June and turn over the money to the cottages’ operator.

Crystal Cove’s historic district includes 46 beach cottages built in the the 1920s. The state parks department paid $14 million to restore 22 cottages — including a yet-to-open café, marine research facility and cultural center — but no money has been reserved for the second phase of the work.

That’s where the city money comes in. Because the cottages are within Newport’s city limits, the city collects a 10% hotel tax, though 1% goes to the Newport Beach Conference and Visitors Bureau.

Officials weren’t really sure how much Newport would get from the cottages and weren’t counting it as a significant part of the city’s $191.6 million budget, so it was suggested that some of the tax money be given to the Crystal Cove Alliance, the nonprofit group that manages the historic district.

“The quicker we put that whole project into operation, then the quicker it is that we can collect 100% of the [bed tax], so it’s of mutual benefit to both them and us to accelerate the development of that project,” Councilman Tod Ridgeway said.

The refurbished cottages, which opened June 26, have sold out within hours every time reservations have been available. No tax revenue figures were available, but Ridgeway has suggested the alliance get half of the money the accommodations generate.

Assistant City Manager Dave Kiff estimated that would mean $50,000 a year for Crystal Cove.

“We are actually thrilled” with the idea, alliance founder Laura Davick said. Her group is now working on a master plan for the remaining restoration work, which has been estimated to cost $15 million to $20 million.

Most of the 24 cottages still to be renovated will be for overnight stays.

The tax-sharing proposal would have to be approved by the City Council. Once the historic district project is finished, cottage tax revenues would revert back to the city.